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Emerging from
the Ashes:
The evolution of leadership
Stephen J. Wiehe
©2010 SciQuest, Inc. Confidential
Safe Harbor
During this presentation we may make statements related to our business that
are considered forward-looking statements under federal securities laws.
Words such as, but not limited to, “plan”, “expects”, “anticipates”, “believes”,
“goal”, “estimate”, “potential”, “may”, “will”, “might”, “could” and similar words
will identify forward-looking statements. These statements reflect our views
only as of today and should not be relied upon as representing our views as of
any subsequent date. These statements reflecting our current views regarding
the future are subject to a variety of risks and uncertainties that could cause
actual results to differ materially from expectations. For a discussion of the
material risks and other important factors that could affect our actual results,
please refer to our SEC filings available on the SEC’s Edgar system and our
website. We encourage all investors to read our SEC filings. SciQuest
expressly disclaims any obligations or undertaking to release publicly any
updates or revisions to any forward-looking statements made herein, except
as required by law.
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©2010 SciQuest, Inc. Confidential
Discussion Summary
• SciQuest Transformation Timeline
• My Leadership Misconceptions
• Our Key Leadership Concepts
• Principles We Live By
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©2010 SciQuest, Inc. Confidential
The story of Questie…
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©2010 SciQuest, Inc. Confidential
A little guy and a lot of money…
= $375M of Invested Capital
= $2.2B Market Capitalization (early 2000)
= $60M Market Capitalization
(late 2000)
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©2010 SciQuest, Inc. Confidential
SciQuest.com
• A B2B Exchange for lab supplies
•“Amazon.com for the lab”
• > 500 Employees
• $25M per Quarter cash flow burn
(2 ½ Quarters operating cash in bank)
Founded 1996
• $64M Revenues
2.5% Gross Margin (revenue less cogs) *
$3,200 per employee
IPO in 1999
• Market Cap (‘00) $2.5B
Crashed in 2000
• Enterprise Value less than $0
• A bank, a web site, a publishing company and
a software company
New CEO 2/12/01
Went Private 7/24/04
• A charismatic CEO
re
• A proud and headstrong culture
IPO 9/24/10
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©2010 SciQuest, Inc. Confidential
The Mindset…
• We are family….
• We are changing the world….
• It’s not about the numbers, it’s about doing something different…
• Our culture is special; it’s something we are very proud of…
• Scott says profits don’t matter – they will come in time….
• We can’t be wrong, we were worth over $2B…
• It’s only a short term valuation problem in that the market doesn’t
really understand us right now
• We are a new economy company…
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©2010 SciQuest, Inc. Confidential
The Change
•A B2B Exchange for lab supplies
•“Amazon.com for the lab”
• Understand how was value created…
•500 Employees
• LOW’ed over 400 Employees
•$25M per Quarter cash flow burn
(2 ½ Quarters operating cash in bank)
• $2M per Quarter cash flow burn
$50M at year end ‘00
•$64M Revenues
2.5% Gross Margin *
$3,200 per employee
• Subscription fees
>70% Gross Margin
•Market Cap (‘00) $2.5B
• Private company (2004)
•Enterprise Value $0
• Enterprise Value $25.25M
•$375M of Equity raised
• $20M of Equity raised
•“It’s all about the vision”
•“It’s all about our customers,
shareholders and employees”
•“We are family” culture”
• A new culture which is our culture
today.
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©2010 SciQuest, Inc. Confidential
SciQuest today
• Leading provider of on-demand procurement and supplier
enablement solutions for indirect goods
• Go-to-market strategy based on target verticals
• More than 165 customers in 16 countries and 5 languages
• Web-based, multi-tenant, single instance platform
• Recurring revenue driven by multi-year subscription agreements
• Long-term growth track record
• Sept. 24, 2010—successful IPO in a tough market
Revenue (K$)
Customers
Adjusted Free Cash Flow (K$)
36,179
29,784
6,003
6785
156
3,636
20,107
127
107
1,636
15,183
84
(2,403)
63
8,805
FY05
FY06
FY07
FY08
FY09
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2004
FY05
FY06
FY07
FY08
2005
2006
2007
2008
2009
FY09
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©2010 SciQuest, Inc. Confidential
Foundation for Profitable Growth
Core
Competencies
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©2010 SciQuest, Inc. Confidential
My Leadership
Misconceptions
©2010 SciQuest, Inc. Confidential
Culture
Is a tangible
result of….
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©2010 SciQuest, Inc. Confidential
Leadership
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©2010 SciQuest, Inc. Confidential
Leadership
and
Management
aren’t the same
things
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©2010 SciQuest, Inc. Confidential
Leadership
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©2010 SciQuest, Inc. Confidential
Leadership Misconception #1
Leadership is a process
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©2010 SciQuest, Inc. Confidential
Leadership Misconception #1
Leadership is a process
Leadership is a behavior
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©2010 SciQuest, Inc. Confidential
Why?
• You lead others by what you do, not what you say.
• Transparency is a vehicle, trust is the key.
• One of two states….Building or Breaking?
• It must be continual, not periodic.
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©2010 SciQuest, Inc. Confidential
Leadership Misconception #2
A leader needs to be ready with an answer
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©2010 SciQuest, Inc. Confidential
Leadership Misconception #2
A leader needs to be ready with an answer
A leader needs to be ready with a question
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©2010 SciQuest, Inc. Confidential
Why?
• Initial questions allow for clarification of the issue or problem.
• Questions allow for conflict without stating such.
• Questions allow you to send a message without embarrassment.
• Asking for input or ideas increases power and autonomy, it doesn’t
make a leader to be weak or losing power.
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©2010 SciQuest, Inc. Confidential
Leadership Misconception #3
A leader needs to be a great speaker
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©2010 SciQuest, Inc. Confidential
Leadership Misconception #3
A leader needs to be a great speaker
A leader needs to be a great speaker, but
an even better listener …
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©2010 SciQuest, Inc. Confidential
Why?
• Seek to understand – then be understood.
• Instead of ‘telling’, listen to understand, understand to empathize,
empathize to change.
• At the center of every joke is a nugget of truth …
• Most people can listen and think faster than they can talk and
think …
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©2010 SciQuest, Inc. Confidential
Leadership Misconception #4
Great ideas come from debate and conflict
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©2010 SciQuest, Inc. Confidential
Leadership Misconception #4
Great ideas come from debate and conflict
Great ideas come from open, constructive
and positive discussion driven by constructive
questions
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©2010 SciQuest, Inc. Confidential
Why?
• “Facilitator” style leaders are more powerful than “Directive” style
leaders.
• Conflict creates situations where ideas and people become
positions – and positions become very hard to change.
• Everyone contributes and therefore buys-in to the idea.
• The situation will change over time and course correction will be
required.
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©2010 SciQuest, Inc. Confidential
Leadership Misconception #5
A leader mandates change
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©2010 SciQuest, Inc. Confidential
Leadership Misconception #5
A leader mandates change
A leader can mandate change in times of
crisis; in periods of growth, a leader must
coax change
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©2010 SciQuest, Inc. Confidential
Why?
• CEOs are used to being direct – “tell” is the normal behavior
“ask” is more powerful and longer lasting.
• Focus on positive reinforcement, not negative. Negative
reinforcement looses effectiveness over time. Positive never
does.
• Removal of stress from a situation yields significantly better
results than the addition of stress.
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©2010 SciQuest, Inc. Confidential
Leadership Misconception #6
A leader needs to be tough:
• they set the standard
• they need to maintain power and an air
of authority
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©2010 SciQuest, Inc. Confidential
Leadership Misconception #6
A leader needs to be tough:
• they set the standard
• they need to maintain power and an air of authority
A leader needs to demonstrate the correct
use of:
• Respect
• Feedback
• Power
• Anger
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©2010 SciQuest, Inc. Confidential
Why?
Respect:
• Always give respect unconditionally – then you can expect it back.
Feedback
• Asking for it opens a dialog.
• If you are willing to receive it, you are teaching others how to receive it so they are
more willing to take it.
Power:
• Give power and authority away daily.
• Understand where the power is and always respect the lack of it.
Anger
• It’s counterproductive.
• Stops all dialog and problem solving – at the worse possible time: when you need it.
• People will pass it on.
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©2010 SciQuest, Inc. Confidential
Leadership Misconception #7
Great leaders are successful people
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©2010 SciQuest, Inc. Confidential
Leadership Misconception #7
Great leaders are successful people
Great leaders surround themselves with
successful people
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©2010 SciQuest, Inc. Confidential
Why?
• Growth and opportunity come from below, not above.
• Behold the turtle; he makes progress only when he sticks his
neck out. Get everyone to stick their necks out…
• Inputs are coached and outputs are measured.
• Don’t think of problems are personal. Great leaders always put
needs of the company, its customers, and employees first.
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©2010 SciQuest, Inc. Confidential
Our Key Leadership
Concepts
©2010 SciQuest, Inc. Confidential
Our Key Leadership Concepts
• Collaboration over consensus
• Respect, trust and recognition for the individual
• Facts then opinions
• Proper use and respect of power
• Focus on the ‘right things’
• Environment
• Incentive programs
• Shareholder value
A hybrid of old and new management styles
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©2010 SciQuest, Inc. Confidential
Principles We
Live By
What we’ve learned …
Or, rules we (aspire to) manage by
©2010 SciQuest, Inc. Confidential
Principles We Live By
• The rule of Buca di Beppo
 Have an “open kitchen”
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©2010 SciQuest, Inc. Confidential
Principles We Live By
• Have an “open kitchen” (rule of Buca di Beppo)
• Measure outputs, not inputs
 Coach inputs
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©2010 SciQuest, Inc. Confidential
Principles We Live By
• Have an “open kitchen” (rule of Buca di Beppo)
• Measure outputs, not inputs
• First the bad news
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©2010 SciQuest, Inc. Confidential
Principles We Live By
• Have an “open kitchen” (rule of Buca di Beppo)
• Measure outputs, not inputs
• First the bad news
• Say what needs to be said, right time, right way
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©2010 SciQuest, Inc. Confidential
Principles We Live By
• Have an “open kitchen” (rule of Buca di Beppo)
• Measure outputs, not inputs
• First the bad news
• Say what needs to be said, right time, right way
• Say “THANK YOU” for feedback – all feedback
Feedback is a gift
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©2010 SciQuest, Inc. Confidential
Principles We Live By
• Have an “open kitchen” (rule of Buca di Beppo)
• Measure outputs, not inputs
• First the bad news
• Say what needs to be said, right time, right way
• Say “THANK YOU” for feedback – all feedback
• Deal in facts … “seek the truth”
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©2010 SciQuest, Inc. Confidential
Principles We Live By
• Have an “open kitchen” (rule of Buca di Beppo)
• Measure outputs, not inputs
• First the bad news
• Say what needs to be said, right time, right way
• Say “THANK YOU” for feedback – all feedback
• Deal in facts … “seek the truth”
• Focus on defining the problem; it should be
95% of the effort.
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©2010 SciQuest, Inc. Confidential
Principles We Live By
• Have an “open kitchen” (rule of Buca di Beppo)
• Measure outputs, not inputs
• First the bad news
• Say what needs to be said, right time, right way
• Say “THANK YOU” for feedback – all feedback
• Deal in facts … “seek the truth”
• Focus on defining the problem; it should be 95% of the effort.
• Focus on the journey … not the destination
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©2010 SciQuest, Inc. Confidential
Principles We Live By
• Have an “open kitchen” (rule of Buca di Beppo)
• Measure outputs, not inputs
• First the bad news
• Say what needs to be said, right time, right way
• Say “THANK YOU” for feedback – all feedback
• Deal in facts … “seek the truth”
• Focus on defining the problem; it should be 95% of the effort.
• Focus on the journey … not the destination
• Trust & respect are key ingredients in success
• You have to give them first before you can earn them
• They simplify all interactions
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©2010 SciQuest, Inc. Confidential
Emerging from
the Ashes:
The evolution of leadership
Stephen J. Wiehe
©2010 SciQuest, Inc. Confidential